U.S.-China AI Competition In The Spotlight

Forbes

7 days ago

WASHINGTON, DC - JULY 23: U.S. President Donald Trump speaks during the "Winning the AI Race" summit ... More hosted by All‑In Podcast and Hill & Valley Forum at the Andrew W. Mellon Auditorium on July 23, 2025 in Washington, DC. Trump signed executive orders related to his Artificial Intelligence Action Plan during the event. (Photo by)
Recently both the United States and China have announced national policies for promoting the development of artificial intelligence. The Trump Administration's U.S. AI Action Plan features a deregulatory approach to driving innovation and building an American AI infrastructure that can be exported overseas. The Chinese Government AI plan instead proposes a global consensus-building organization that would seek a balance between AI development and security.
The competition between these 2 contrasting approaches may be expected to have major implications for the adoption of AI around the world, and, thus, for the future of the global economy. A consistent deregulatory emphasis might be a winning American strategy.
America's AI Action Plan
'America's AI Action Plan,' released by the White House on July 23, 2025, states that 'America must have the most powerful AI systems in the world,' and 'must also lead the world in creative and transformative application of these systems. Achieving these goals requires the Federal government to create the conditions where private-sector-led innovation can flourish.'
The Action Plan features 3 pillars: (1) accelerate AI innovation; (2) build American AI infrastructure; and (3) lead in international AI diplomacy and security. The first pillar merits particular attention.
The AI Innovation pillar includes a variety of specific initiatives designed to support the rapid adoption of and application of AI by government, businesses, and workers.
Reducing regulatory burdens is the key policy that underpins the overall Trump AI innovation strategy.
Most significantly, 'all Federal agencies . . . identify, revise, or repeal regulations, rules, memoranda, administrative orders, guidance documents, policy statements, and interagency agreements that unnecessarily hinder AI development or deployment.' The clear aim is to eliminate excessive federal AI regulation, to the extent legally possible.
Biden-era Federal Trade Commission enforcement actions that 'advance theories of liability that unduly burden AI innovation' are to be set aside.
State AI regulation is actively discouraged, to the extent allowed by law.
The AI plan also takes aim at state AI regulations that interfere with the Federal Communications Commission's ability to carry out its statutory responsibilities.
Furthermore, the Plan seeks to discourage excessive state-level AI regulation by steering AI-related discretionary federal funding away from states whose 'regulatory regimes may hinder the effectiveness of that funding or award.'
The AI Action Plan's deregulatory tilt reflects continued support for the U.S. policy of 'permissionless innovation,' which drove the development of the internet from its beginnings in the 1990s. Permissionless innovation means 'that anyone should be able to innovate without having to seek permission from a government or other authority.' That policy allowed the internet to grow freely without U.S. Government regulatory authorization and oversight placed over the firms that developed it. The direct result was unprecedented innovation and huge economic dividends generated by U.S. firms, benefiting the American and global economies.
Permissionless innovation does not mean freedom from legal requirements that protect health, safety, and business on the merits. AI innovators, like the internet pioneers that came before them, remain fully subject to the full range of U.S. civil and criminal laws, including national security, antitrust, consumer rights, environmental protection, and civil rights, to name just a few.
By reducing the expected weight of regulatory burdens, the AI Plan may be expected to incentivize additional investments in and the faster implementation of AI systems.
In turn, these effects could stimulate American competition in AI-related sectors and speed innovation, providing economic growth dividends and benefits to American businesses and consumers. American international competitiveness in AI and AI-related markets would benefit.
Nine separate proposals are aimed at creating a robust American AI Infrastructure. These include deregulatory streamlined permitting for AI-supported infrastructure, promoting an AI-supportive electric grid, developing a skilled workforce for AI infrastructure, and ensuring cybersecurity.
This pillar emphasizes exporting American AI to allies and partners; strengthening AI-related export controls, national security protections, and risk assessments; and countering Chinese influence in international governance bodies.
The Action Plan notes that international organizations that are proposing AI governance frameworks and development strategies too often have advocated for burdensome regulations, vague 'codes of conduct' that promote cultural agendas that do not align with American values, or have been influenced by Chinese companies attempting to shape standards for facial recognition and surveillance.
In response, the Action Plan recommends 'leverage[ing] the U.S. position in international diplomatic and standard-setting bodies to vigorously advocate for international AI governance approaches that promote innovation, reflect American values, and counter authoritarian influence.'
Chinese Government Global Plan for AI
Chinese Premier Li Qiang proposed a global organization to oversee the development of AI in a July 26 speech, just 3 days after the release of the American AI Action Plan.
According to the Chinese Government, Li 'call[ed] for the early formation of a global framework and rules that have broad consensus to guide the development and use of AI.' Li noted the need 'to strike a balance between development and security.' He added that China is willing 'to offer more Chinese solutions.' In particular, 'China stands ready to undertake joint technical research with other countries, and will be more open in sharing open-source technology and products.'
China's support for a new global AI authority (though cloaked in 'consensus-building' language) stands in sharp contrast to the Trump Administration's deregulatory, competition-driven American AI model, which the U.S. would seek to promote through economic diplomacy focused on existing international bodies and friendly nations.
The Big Competition
The 2 recent government announcements provide a preview of the coming global competition between contrasting American and Chinese AI models.
China and the U.S. are widely regarded as the 2 major global players in AI.
China
China is a formidable force in AI development. China's 2017 New Generation AI Development Plan revealed its intention to become the global leader in AI by 2030. China's Government has worked closely with its tech giants to make them AI leaders, and has encouraged the collection of data to build AI models. Chinese agencies and businesses have introduced AI at all levels.
China has aggressively sought to have Chinese AI systems adopted in Asia, Africa, and South America. Moreover, with government support, Chinese firms are opening offices and entering partnerships in the Middle East, Europe, and the U.S.
China is also investing heavily in AI education and in AI military applications.
The U.S.
The U.S. still leads 'leads the world in large-scale AI development, driven in part by its leading talent and innovation ecosystem, but also by its access to cutting-edge 'compute' – the specialized chips, data centers, and infrastructure needed to train and deploy the most capable AI systems.'
The U.S. Government is not emulating China's heavy government control over AI development.
The AI Action Plan's provisions dealing with labor and infrastructure reflect a 'light touch' approach. They primarily feature encouragement through easing burdens on the private sector, rather than detailed industrial policy directives.
Most significantly, the AI Action Plan has an overarching deregulatory focus. It leaves it to entrepreneurs to produce new AI innovations, free from government micromanagement.
The Bottom Line
Competition on the merits among competing AI systems, like competition in general, should tend to benefit society. It can be a 'win' for economic welfare worldwide, yielding an optimal array of products and services.
The extent of direct Chinese Government involvement in developing and promoting its vision of AI is, however, a complicating factor. The U.S. Government may be expected to resist Chinese policies that would generate anticompetitive market distortions in AI markets.
A consistent U.S. Government approach of deregulation and 'permissionless invitation' just might be the 'secret sauce' needed to achieve global success for American AI, assuming geopolitical obstacles are surmounted.